Reverse vesting orders (or "RVOs") allow the
realization of value from assets of a debtor company in
circumstances where a traditional transaction model is not
effective, preserving the value of permits, tax losses and other
assets which cannot be transferred to a purchaser. Two recent
decisions demonstrate the willingness of courts to embrace creative
solutions, where appropriate, to realize value for
stakeholders.
What is a Reverse Vesting Order?
A traditional vesting order transfers assets out of the
insolvent company to the purchaser, leaving behind any unwanted
assets and liabilities. In contrast, a reverse vesting order
transfers undesirable assets and liabilities from the insolvent
company to another company, typically incorporated specifically for
the purpose. This leaves the debtor company holding only those
assets and liabilities that the purchaser wishes to acquire,
allowing the shares of the debtor company to be sold, preserving
valuable permits,
